Utilities Ask State To Fund Natural Gas Plan

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HARTFORD, Conn. (AP) _ Connecticut’s regulated utilities have wasted no time seizing on a new state energy policy passed by the legislature less than two weeks ago to encourage natural gas hookups.

Connecticut Natural Gas, Southern Connecticut Gas and Yankee Gas have presented state regulators with a rare joint proposal outlining how they would spend tens of millions of dollars to connect 280,000 customers over 10 years. They are asking the state to approve a new rate plan to finance the massive project.

In its proposal, Yankee Gas, a subsidiary of Northeast Utilities, said capital spending would be $35 million next year and more than $96 million in 2015 and 2106. The Southern Connecticut Gas Co. said capital spending will be $61 million in the three years while Connecticut Natural Gas expects capital spending of about $47 million in the same period.

The utilities say they’ve received numerous requests from potential customers asking to be connected to natural gas, which is generally less expensive than oil, a primary home heating fuel in the Northeast. In addition, state energy policy announced by Gov. Dannel P. Malloy last October seeks to spur greater use of natural gas by residential, commercial and industrial customers.

Yankee Gas stands to gain about 85,000 new customers, a 40 percent increase from its current 213,000 customers, said Rodney Powell, president of Yankee Gas.

“It’s been a good time to be in the gas business,” he said.

Southern Connecticut and CNG, both part of UIL Holdings Corp., expect to increase the number of customers by two-thirds, to nearly 540,000 from its current 340,000, said Bob Allessio, vice president of gas operations at CNG and Southern Connecticut.

The utilities are asking regulators to approve new rates that would spread the cost of hookups over 25 years, eliminate a required contribution toward construction for customers connected to gas lines that are 150 feet or closer to gas mains and make other rate changes to encourage the large-scale switch to natural gas. The companies also spell out to regulators the millions needed in revenue and what they believe the expansion costs will be.

Family-run home heating oil companies that have been stung by skyrocketing oil prices have complained to state officials that Connecticut is promoting unfair competition.

Malloy rejected that argument, telling reporters on a conference call on Tuesday that no one is required to convert to natural gas.

“What am I supposed to do?” he asked. “Leave the people of Connecticut to pay higher and higher prices?”

The utilities plan to launch a marketing campaign, collaborate with state agencies and offer rebates and other financing tools as incentives to switch to natural gas.

The drive to rely more on natural gas is in response to prices that have declined in the past few years, driven primarily by rising domestic production. In contrast, oil prices have been rising in response to increased global demand.

The three utilities warned regulators that the plan may be too large to draw enough contractors and heating and ventilating workers may be unable to keep up with customer demand. They also said construction could fail to meet schedules.